How Early Should We Teach Financial Literacy?

Chicago's treasurer recently launched an initiative to make financial literacy a regular piece of the curriculum for grade schoolers.

The Ariel School Drumline kicked off the financial literacy festivities with a series of money-oriented chants and cheers. Patrick L. Pyszka/City of Chicago

What’s the difference between saving money and investing it? How do you create a budget? To Chicago Treasurer Stephanie Neely, these basic financial questions are best addressed first not with adults -- they should be asked of kids.

“If you get to them in high school, by then it’s too late to change behaviors,” she said during an interview in her City Hall office earlier this month. “With financial literacy, it really is never too early.”

Neely, who is in the middle of her second four-year term, has recently launched her push to make financial literacy a regular piece of the curriculum for Chicago’s grade schoolers. She has imported a program created by the Canadian Foundation for Economic Education in partnership with BMO Financial Group called Talk With Our Kids About Money Day, or “Two-Kam,” as Neely and her staff call it. On April 30, Chicago became the first U.S. city to implement the program, which is starting in about 100 city schools.

The program, which is funded by BMO Financial, includes curriculum and activities for teachers to use year-round. This month, educators received a financial literacy guide, which is a tool for teachers to incorporate personal finance concepts into their math and social studies curriculum. Neely's office also hosted a roundtable discussion with 50 local and national financial literacy advocates, including members of the President’s Advisory Council on Financial Capability, to discuss the guide.

Of course, the city has had its own problems with balancing its finances. But, as Neely puts it, constituents are concerned about services -- when they are struggling with their own bills, it's hard to care about the city's choices. "They’re not asking about the city’s credit rating,” she said.

So then why is a city treasurer getting involved with curriculum for school-aged kids? Because she says it connects directly to a common problem in big cities: lack of proper financial services for lower income people. Chicago has joined other cities across the country in launching a “Bank On” program. A partnership between local government officials, financial institutions, and community-based organizations, Bank On programs provide low-income and underbanked people with free or low-cost starter or “second chance” bank accounts and access to financial education. San Francisco was the first city to launch such a program in 2006.

According to a 2011 survey by the Federal Deposit Insurance Corporation, almost one in 10 American households don’t use a bank, meaning they use pawn shops and check-cashing outlets for quick cash. A total of 20 percent of Americans are at least “underbanked,” meaning they use expensive alternative financial services, such as payday lenders.

“I used to say, ‘Let’s just get rid of pay day lenders,’” Neely said. “But then I realized they actually do serve a need: not everyone can walk into a bank and open a checking account.”

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